Lsl Property Services Plc · LSE:LSL
Lsl Property Services — H1 2020 Earnings Presentation
30 slides from Lsl Property Services's earnings presentation, 2020
Slide 1: LSL Property Services plc Interim Results
LSL Property Services plc Interim Results Six months ended 30 June 2020
Slide 2: Contents
Contents 1. Financial and Operational Highlights 2. The Story of the Half Year 3. Financial and Business Review 4. Our Strategy 5. Outlook 2020 INTERIM RESULTS PRESENTATION 1
Slide 3: Robust performance in context of Covid-19 market disruption
1 Robust performance in context of Covid-19 market disruption Group Revenue Divisional Underlying Operating Profit (LFL) £114.9m -24% Financial Services £4.9m 14% Group Underlying Estate Agency £4.1m 3% Operating Profit £12.5m 3% Surveying £4.9m -23% 2019: Net Bank Debt £12.7m £52.0m Gearing Ratio1
Slide 4: Quick and effective response to rapidly changing conditions
1 Quick and effective response to rapidly changing conditions Group • Seamless transition to new leadership • Quick response to Covid-19, with immediate planning to prepare for easing of restrictions • Swift execution of reopening strategy, with overwhelming majority of staff now back at work • Cont
Slide 5: Contents
Contents 1. Financial and Operational Highlights 2. The Story of the Half Year 3. Financial and Business review 4. Our Strategy 5. Outlook 2020 INTERIM RESULTS PRESENTATION 4
Slide 6: Strong performance in Q1 in each of the principal operating divisions
2 Strong performance in Q1 in each of the principal operating divisions Decisive General Election result gave stability with improved consumer sentiment and increased market activity Q1 Underlying Operating Profit Mortgage completions up 8% YoY to up 62% YoY. Increasing in each £7.8bn representing 9
Slide 7: Resilient performance during lockdown
2 Resilient performance during lockdown Rigorous control over cash and costs with strong profit contribution from Financial Services as the Group benefited from its diversification Voluntary reduction in salary and 3.3k Group Employees placed on fees by Board and Executive furlough (c. 73%) Committe
Slide 8: Trading post lockdown has been strong and is improving
2 Trading post lockdown has been strong and is improving Sentiment should be helped by changes to Stamp Duty announced in July July Mortgage applications up 20% New financial advisor pipeline YoY remains strong Estate Agency sales activity materially ahead YoY with increased Strong Marsh & Parsons r
Slide 9: Contents
Contents 1. Financial and Operational Highlights 2. The Story of the Half Year 3. Financial and Business review 4. Our Strategy 5. Outlook 2020 INTERIM RESULTS PRESENTATION 8
Slide 10: Summary
3 Summary H1 2020 H1 2019 Change • Profit underpinned by agile operational execution P&L (£m) and resilient business model Revenue 114.9 154.1 -25% • Careful fiscal management during the period Total Operating Expenses (102.4) (142.1) -28% Group Underlying Operating Profit 12.5 12.2 3% • Strong cont
Slide 11: Financial Services Operating Profit grew fourfold 2015 to 2019
3 Financial Services Operating Profit grew fourfold 2015 to 2019 and underpinned Group performance during the Covid-19 market disruption H1 2020 H1 2019 Change • Profit up YoY in both Q1 and Q2 P&L (£m) • Margin enhancement Total Revenue 28.1 34.3 -18% • Strong pipeline of advisors Expenditure (23.2
Slide 12: Estate Agency financial performance has been positive despite Covid-19 and Tenant Fee ban
3 Estate Agency financial performance has been positive, despite the impact of Covid-19 and the Tenant Fee ban H1 2020 H1 2019 Change • Transaction bounce in the South East following P&L (£m) decisive General Election Residential Sales Exchange Income 18.6 27.6 -33% • Covid-19 and Tenant Fee Ban hea
Slide 13: Strong Q1 revenue performance by Marsh & Parsons and significant recovery post lockdown
Strong Q1 revenue performance by Marsh & Parsons and significant 3 recovery post lockdown H1 2020 H1 2019 Change • M&P delivered a strong underlying operating profit with 161% of growth over prior year P&L (£m) • Adjusting for Covid-19 and furlough benefit, M&P Total Revenue 12.1 15.0 -20% still del
Slide 14: Surveying saw strong demand following lifting of restrictions
3 Surveying saw strong demand following lifting of restrictions H1 2020 H1 2019 Change • Quick ramp-up of remote valuations using previous technology investments, as an P&L (£m) alternative to physical valuations Total Revenue 31.1 42.7 -27% • Physical / remote valuations mix trending Expenditure (2
Slide 15: Exceptional Items and other Balance Sheet items
3 Exceptional Items and other Balance Sheet items H1 2020 H1 2019 Exceptional Items (£m) • Exceptional Costs mainly relating to: Exceptional gains: - (0.6) Historical PI Costs provision release • Planned Surveying transformation Exceptional costs: • Estate Agency branch/centre closures and Branch cl
Slide 16: Cash-flow
3 Cash-flow H1 2020 H1 2019 Operating Cash-flows (£m) • Strong cash control with net debt at £12.7m at 0.31x Group Underlying Operating profit 12.5 12.2 gearing against 3.25 covenant Depreciation (PPE only), working capital etc. 26.6 (6.2) Cash-flow from operations (pre PI and exceptionals) 39.1 6.0
Slide 17: Contents
Contents 1. Financial and Operational Highlights 2. The Story of the Half Year 3. Financial and Business review 4. Our Strategy 5. Outlook 2020 INTERIM RESULTS PRESENTATION 16
Slide 18: Our Strategy
4 Our Strategy Ongoing development of strategic goals during 2020 with the focus on: Grow Financial Services Grow Estate Agency Market Share Remain UK’s Number 1 Surveyor Enhance leading position in mortgage Increased focus on market share, but To be supported with evaluation of network market, whil
Slide 19: Broader and less volatile revenue streams marked by rapid growth of Financial Services
The Group has developed broader and less volatile revenue streams 4 marked by the rapid growth of Financial Services 5 Year Divisional Operating Profit History (year ended 31 December) • LSL now a leading provider of mortgage advice £m • Estate Agency profitability improving following £30.0 branch r
Slide 20: Financial Services is delivered through a variety of channels
4 Financial Services is delivered through a variety of channels Brands Customer Channel Intermediary Direct to Consumer New Build Home PRIMIS: 1997 independent advisers in 890 326 directly employed advisers and 25 Metrics 83 directly employed advisers (RSC, firms1 self-employed advisor in both LSL a
Slide 21: LSL is a leading provider of mortgages and non-investment insurance products
4 LSL is a leading provider of mortgages and non-investment insurance products LSL Financial Services Revenue Split for 2019 Protection Insurance Insurance products cover: life, income protection, critical illness, amongst others Mortgage Advice Commission paid by insurance Advice provided by interm
Slide 22: Built a market leading position in Financial Services with opportunities for further growth
Built a market leading position in Financial Services with opportunities for further 4 growth H1 LSL Financial Services mortgage completions (£bn) Mortgage completions market share CAGR 15% 9.2% 14.7 14.6 8.6% 13.2 8.0% 7.1% 7.4% 9.1 8.3 2016 2017 2018 2019 2020 2016 2017 2018 2019 2020 H1 Strategic
Slide 23: High quality EA network of owned and franchise branches
4 High quality EA network of 226 owned and 130 franchise branches LSL Brand Branch numbers Geography Average House Price % of total Estate Agency revenue Brand Details Owned Franchised Total Your Move 89 79 168 National £190k 36% Reeds Rains 55 49 104 Mainly North £172k 19% LSLi 52 2 54 London/SE £4
Slide 24: Traditional agents dominate a highly fragmented market
4 Traditional agents dominate a highly fragmented market Market Context Share of housing stock available for sale by volume • There are over 16,000 estate agent branches in the UK with the 4 largest estate agencies responsible for c.15% of the market • Growth of online and hybrid agent has stagnated
Slide 25: LSL is the UK's largest provider of residential valuation services
4 LSL’s is the UK’s largest provider of residential valuation services Brands Top 3 B2B Products Strategic opportunities: 1. Physical Mortgage Valuations • To be the acknowledged expert in its core markets 2. Remote Mortgage Valuations • To remain the pre-eminent provider 3. Other Property Pre-acqui
Slide 26: Current focus is to progress strategy and position the Group to optimise performance in 2021
Current focus is to progress strategy and position the Group to optimise 4 performance in 2021 Optimising for 2021 • Selective investment in targeted marketing spend and other operational initiatives • Selective reinvestment in Capex and business development resource • Assessment of market for letti
Slide 27: Contents
Contents 1. Financial and Operational Highlights 2. The Story of the Half Year 3. Financial and Business review 4. Our Strategy 5. Outlook 2020 INTERIM RESULTS PRESENTATION 26
Slide 28: Outlook
5 Outlook • Positive performance in H1 despite headwinds. • Delivered £2.0m PBT and Underlying Net Debt lower than last year. • Following relaxation of lockdown focus has been on driving market share performance. • Careful investment in business development resource, marketing and capital expenditur
Slide 29: Disclaimer
Disclaimer This document contains certain statements that are forward-looking statements. They appear in a number of places throughout this document and include statements regarding our intentions, beliefs or current expectations and those of our officers, directors and employees concerning, amongst
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